Midtown Atlanta is an example of the growing trend of companies relocating major research facilities to be near urban universities that provide mixed-use amenities, lively places, and a high density of firms. For example, Pfizer recently moved one of its largest research centers to Kendall Square in Cambridge, blocks from MIT, and Google now has its machine learning research hub in Baker Square in Pittsburgh, near Carnegie Mellon University.

Companies are relocating major research facilities to be near universities regardless of whether they are found in urban, suburban, or even rural areas. In fact, Silicon Valley exists because of Stanford University. This is an old trend dependent on the quality of the research university. It had, still has, nothing to do with where the university is located.

Well, that's not entirely true. It used to have something to do with where the university was located. Back in the day (50s and 60s), innovation blossomed near universities that enjoyed a wealth of greenfield development potential. The university could expand with little to no political controversy. Such impediments weighed on the urban campus of Penn.

Today, brownfields are the new greenfields. Universities such as Johns Hopkins have become major players in urban redevelopment. Hence the trend Katz notes. But the history he offers to explain the geographic shift is erroneous.

2 comments:

Does innovation need to be in the city? Is innovation better off in the city? Is there a density dividend for innovation? Perhaps. Perhaps not. We don't know.

I think that there is several issues that need to be unpacked with this question. First, does the location in question only have a single innovative company in a particular industry or is it attracting multiple companies? This would seem to be a bigger problem in a rural area rather than a suburban or urban area. For example, several years ago, a startup that was a university spinoff tried to hire me. I didn't take the job because the university and the startup were in a "rural" area far away from any major cities. The problem was that if the startup failed then I would be unemployed in a place with no local jobs in my industry. That problem is a lot less likely in a suburban or urban area, so I can see that rural areas are less "innovative" if for no other reason than they will have trouble attracting people. On the other hand, if there is a cluster of companies in a rural area, then that can mitigate this problem so people need not worry about finding a job in their industry if a single company fails.

Second, what about infrastructure, in particular transportation? This doesn't have anything to do with innovation as such, but I think could be a hindrance if not dealt with. In theory, this should mean that urban areas would be the most innovative since they provide multiple transportation options from walking to biking to public transit. Among other things they allow for more networking since it allows for more opportunities to interact with other people, in theory. Driving in a car tends to be solitary. Additionally, without the enough transportation infrastructure, a situation could develop like in Austin where commuting is horrible, but a car is the only real option. This can not be good for productivity. However, it seems like that most (maybe even every) highly innovative location in the US has a real problem with transportation so the alleged urban benefits to innovation might not exist. The San Francisco Bay area is the best example of this.

In principle, when it comes to innovation urban vs. suburban vs. rural may not matter. However, if innovation is successful, then it is going to attract a lot of people and having a place that has the infrastructure (whether it is transportation infrastructure or anything else) to efficiently absorb those newcomers is helpful even if it doesn't lead to a more innovative place. One thing that's happening now is that people are leaving San Francisco/Silicon Valley, for example< or considering it because dealing with the symptoms of insufficient infrastructure simply isn't worth it to them. That can not be good for innovation.

The problem was that if the startup failed then I would be unemployed in a place with no local jobs in my industry.

That's a problem just about everywhere, not just rural locales. And even if the startup does succeed, the chances of sticking around are slim for a variety of reasons. But let's not conflate innovation with risk-taking and startup success. Great basic research can spur innovation in any geography.